Jonathan McIntosh made an interesting comment wanting to replace markets with a “democratic” process. But markets are more democratic than democracy.
It was quite some time ago that McIntosh made this remark, but I do not follow him and I first saw the comment recently. Here is the actual quote by McIntosh.
Now, how can something be more democratic than a democracy? The key is actually found in Mcintosh’s comment. He uses the word “participatory.” How do you participate in the planning process in a democracy? You vote. If you don’t vote, you do not participate. Of course, we know that not everyone votes. The 2012 presidential election had a 54.87% voter turnout rate. Elections for other officials have even lower voter turnouts. Democracies are only democratic when there is 100% voter turnout and that rarely happens.
Inaction as Participation
Now let’s compare this to natural market dynamics. In a natural market, inaction is participation. We see this all the time. How do you get a business to change its policies? You don’t do it by voting. You do it by not shopping at that business. In many ways inaction is even more powerful than action when it comes to natural market dynamics. The fact that inaction is participation, you end up with 100% voter participation every time.
Let’s take Black Friday sales. Yes; they are still quite popular and sadly quite dangerous, but more and more people are choosing to shop online rather than in physical establishments. This is actually beneficial for box stores. Online orders are far less expensive. It doesn’t take a cashier or any sales associates.
Now, of course, the United States is a democratic republic rather than a democracy so it is even less democratic than a true democracy, but the comment was merely about finding a “democratic participatory planning process.” So it is clear that this is exactly what the set of natural market dynamics happens to be.
Government can manipulate the vote. This is true both in democracies and in markets. Natural markets are one thing, but we have to be careful because we do not live in a natural market. Going back to the box stores for a second, it’s true that choosing not to shop at Walmart et al is a vote against Walmart, but the government does a lot of the voting for us by taking resources away from us and giving them to domesticated businesses. Still, this is not an issue with the market. It is an issue with domestication of market agents.